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22 January 2024 | Comment | Article by David Hulse

Top tax year end tips


1.Maximise contributions to tax-advantaged accounts

One of the most effective strategies to reduce your tax burden in the UK is to contribute to tax-advantaged accounts, such as:

Pensions: Maximise your contributions to workplace pensions or personal pensions. Pension contributions are eligible for tax relief, reducing your taxable income.

Individual Savings Accounts (ISAs): ISAs offer tax-free growth on your investments and tax-free withdrawals. Depending on your financial goals, you can contribute to a Cash ISA or a Stocks and Shares ISA.

Lifetime ISA (LISA): If you’re saving for your first home or retirement, consider a LISA. The government gives a 25% bonus on contributions, which can significantly boost your savings.

2. Tax-Efficient Investments

Investments can have varying tax implications, so consider these below strategies for tax-efficient investing. Remember to consult with a professional company like financialadvisers.co.uk to make the best choices for your financial goals.

Capital Gains Tax (CGT): Investments held for more than one year are subject to lower CGT rates. Plan your investments to minimise short-term gains taxed at your standard income tax rate.

Tax-efficient funds: Some investment funds are structured to be tax-efficient, reducing the tax impact of distributions. Look into index funds and exchange-traded funds (ETFs), known for their tax efficiency.

Invest in tax-advantaged assets: Certain investments, like Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EIS), offer tax incentives to encourage investment in smaller companies.

3. Leverage tax credits

Explore tax credits available in the UK to directly reduce your tax liability. These may include Marriage Allowance, Marriage Tax Allowance, or Child Benefit.

If you would like further financial planning advice, please contact our team of independent financial advisers.

4. Strategic Timing of Income and Deductions

Consider the timing of your income and deductions to optimise your taxable income. For instance:

Tax Year End Planning: Review your income and deductions before the end of the tax year and make any necessary adjustments.

Utilise Annual Allowances: Make the most of annual allowances for savings and investments, such as the ISA allowance and pension contributions.

5. Charitable giving

Contributing to charitable organisations can be personally rewarding and offer tax benefits. Donations to qualified charities in the UK are usually tax-deductible, reducing your taxable income.

6. Estate planning

Effective estate planning is crucial for managing your assets and minimising inheritance tax. Strategies may include gifting, creating trusts, and utilising the lifetime estate tax exemption to protect your wealth for future generations.

Conclusion

Tax-efficient financial planning is a potent tool for cultivating and safeguarding your wealth. By capitalising on tax-advantaged accounts, employing tax-efficient investment strategies, strategically timing income and deductions, and staying abreast of tax laws, you can minimise your tax liability and make the most of your financial resources. Always ensure that your financial planning aligns with your overarching financial objectives and priorities.

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Author bio

David Hulse heads up the Hugh James Independent Financial adviser team. An experienced adviser looking after personal and professional clients based all over the UK from London to Edinburgh and closer to home here in South Wales.

Disclaimer: The information on the Hugh James website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. If you would like to ensure the commentary reflects current legislation, case law or best practice, please contact the blog author.

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